Thanks to the recent acquisition of Riviera Waves, CEVA is expanding from Digital only DSP IP, to supporting complete solution (Digital + mixed-signal) for both WiFi and Bluetooth functions. Such a move is already a very good market positioning, as customers prefer buying to a single source the digital and the mixed-signal part of the same function, WiFi or Bluetooth. We think this acquisition will strongly help CEVA to attack new market segments where connectivity through a wireless interface is key: Smart Home, Internet of Things, Wearable or Medical applications. The acquisition of Riviera Waves by CEVA for $19M (including certain performance and other milestones as well as a two years retention plan for current RW employees) is, at first, a success for a 29 employees company founded in 2010, reaching $3.6M revenue and break-even in 2013. Let’s take a look at Riviera Waves IP port-folio, and how it completes the offer from CEVA.
The WiFi demonstration board on the above picture helps visualizing the complementarity: you can see on the middle of the larger board the Riviera Waves MAC, developed on the CEVA Teak-Lite 4 DSP, connected to the (Riviera Waves) Hard Wired Modem. The Modem is interfacing with the (Riviera Waves) RF Module on the daughter board. This solution addresses the WiFi, from 802.11n up to 802.11ac 2×2. If you add a CEVA XC4210 modem to the above, the complete IP will support WiFi 802.11ac 4×4.
Bluetooth Low Energy (Smart Ready) BaseBand IP
Bluetooth Low Energy (Smart Ready) Modem and RF IP
The two IP (Baseband and Modem/RF) supporting Bluetooth 4.0 or Bluetooth Low Energy (BLE) from Riviera Waves could be used along with CEVA Bluetooth software stack. CEVA will be able to propose a completely integrated solution: Software Stack + Controller (Baseband and Modem) + RF, the customer selecting the most suitable option for the baseband, between RTL of Teak-Lite 4 DSP based.
If we move up to the system level, we can see that the offer from CEVA has been strongly enhanced, as the IP vendor can build a complete offer, Controller + PHY or Digital plus mixed-signal for WiFi and Bluetooth. Let’s take a look at the business impact by market segment.
Mobile (Smartphone, Media tablet, Ultrabook)
As of today, Bluetooth and WiFi functions were supported by specific IC. If we look at a chip vendor like Qualcomm, selling the main Application Processor, WiFi IC and BT IC, the trend is clearly to integrate the last two functions into Snapdragon. This means that the followers will also tend to integrate WiFi and BT in the Application Processor. But, unlike Qualcomm who bought Atheros to support these wireless interface, these chip vendors will have to externally acquire WiFi and BT as an IP. CEVA will be well positioned to serve this mobile market, as the company has a long presence through the 2G, 3G and LTE baseband DSP IP offer!
This market is still emerging, but we can guess that it is seen as a new opportunity to develop IC to address needs for various applications. If we think about any of these applications, it’s likely that internet protocol is over sized, leading to more complex, and more expansive solution than when using WiFi or Bluetooth. Such an emerging market could generate several dozens of opportunities per year and motivates start-up creation. We can foresee that low power consumption will be a strong requirement, pushing for WiFi or BT integration into a System-on-Chip. CEVA should be well positioned on this market. Just a remark: because CEVA’s business model is based on up-front license plus royalties, if it takes longer to reach very high production volume on this market, the license part of the IP vendor revenue should be already strong, if the company succeeds in penetrating this market.
The same remarks made about Smart Home applies for the wearable and medical applications: WiFi or BT are well suited.
What could be the upside revenue generated by Riviera Waves? We have to take into account that RW products will benefit from CEVA brand name recognition, necessarily higher than a four years old company, as well as from a long time established, world wide sales channel. If we evaluate the SoC design starts for Smart Home, Wearable, Medical and IoT to be above 100 in 2018 (conservative), then a 20% penetration would generate 20 WiFi or BT IP design-win for CEVA. Adding Mobile segment and the related SoC design starts, would generate another dozen IP design win. It is not over-optimistic to foresee an upfront license upside potential in the $15M to $20M range in 2018… CEVA acquisition of Riviera Waves look like a good move!